Wikinvest Wire

So what if the appraisals were fraudulent!

Thursday, November 08, 2007

Jim Cramer of CNBC joins Republican Senator John Sununu of New Hamphire in wondering about the timing of New York Attorney General Andrew Cuomo's probe into appraisal fraud by major mortgage lenders.


The historians are going to have a field day when writing about this era - unlike the aftermath of prior speculative bubbles, this one is on YouTube and in blogs.

Hopefully, the passage of time, along with some major (and probably painful) adjustments to what Ron Paul calls our "subprime economic system", will result in clearer heads prevailing someday - both on television and in Congress.

For those who missed it, here are Senator Sununu's comments from today's Joint Economic Committee group therapy session with Fed chief Ben Bernanke:
Yesterday, the Dow dropped 360 points and a number of analysts in the financial press blamed a lot of that drop on the New York Attorney General and his press release that alleged, in his words, "systemic fraud and a pattern of collusion in the mortgage industry" and he made those allegations with specific reference to transactions between Fannie Mae, Freddie Mac, and Washington Mutual for which he issued subpoenas. My question to you is, in this environment, where we see big problems with credit in the mortgage industry, is this kind of a press release really helpful in solving the problems in front of us?
Ben Bernanke didn't really offer up an answer - perhaps some help can be provided here.

No, Senator, we should handle this sort of thing quietly so that consumer confidence is not impaired because consumer spending is 70 percent of the U.S. economy and Christmas shopping season is just around the corner.

Clearly, the New York attorney general is not only trying to destroy the American economy and the American way of life - he's out to get Christmas too!

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8 comments:

Anonymous said...

Yeah, about that pesky fact -- something about the consumer being 2/3rds of GDP....

http://www.federalreserve.gov/releases/g19/Current/

Economic growth happens through credit expansion. So what happens when the consumer shuts down (because they want to; because they have to; because the lenders do it for them)?

Those numbers are an all-out disaster, but I guess we should have know that the ATM machine that was our HELOC is not broken.

Instead of a new X-box and 371" Plasma HD TV for Christmas, maybe little Johnny should get ammunition and canned goods.

Alcoholocaust

Anonymous said...

...err, that should have been HELOC ATM machine NOW broken...

Anonymous said...

Cramer is an embarrassment.

Anonymous said...

Cramer is just part of the ecology, no more - no less.

Anonymous said...

like the early days of the Enron meltdown....wallstreet cheerleaders were bemoaning the release of the obvious fraud that Enron was...cramer and kudlow being some of the biggest whiners upto the time the obvious form of SPE and their reason to exist was clear as day.

We are seeing the same with the meltdown. Don't tell the public there were screwed as if they can't figure it out. a couple million foreclosues, bankruptcies and they think the american people can't figure out the con game??

The bailout of wallstreet will achieve the intend. Hyperinflation and devaluing assets making debts and liabilites worth so much less. Side effect is 1929 all over agin.

Anonymous said...

Read this post over at CalculatedRisk. I think Cuomo is doing deeper digging.

Go here:
Post at CalculatedRisk

Thanks

Anonymous said...

The Pointer above refers to this posting at CalculatedRisk

Earlier post at CalculatedRisk
which contains the following:



This is very interesting precisely because it isn't going to be about inflated appraisals. It's going to be about how far anyone can get away with two practices that are the lynch-pins of the mortgage industry: outsourcing regulatory liability to a third party bag-holder and doing business on a representation and warranty basis without pre-sale due diligence.

LongDistanceBlogger said...

Save the Republic...allow BS appraisals!

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